On 18 November 2021, the Parliament of Malaysia passed the 2022 budget at the policy stage. The budget includes the following tax proposals related to corporate taxations.
- To support the Government’s initiative in assisting the affected parties, it is proposed a one-off special tax known as Cukai Makmur be imposed on companies other than MSMEs generating high income during the COVID-19 pandemic period as follows: i. the chargeable income up to the first RM100 million is subject to 24% tax rate; and ii. the remaining chargeable income is taxed at 33%. The measure will be enacted for the year of assessment 2022.
- To support the recovery of businesses that suffered losses due to the COVID-19 pandemic it is proposed that current unabsorbed business losses that can be carried forward from year of assessment 2019 onwards be extended from a maximum period of 7 consecutive years of assessment to a maximum period of 10 consecutive years of assessment; and the accumulated unabsorbed losses up to the year of assessment 2018 that can be carried forward until the year of assessment 2025 be extended until the year of assessment 2028. Effective date for this measure is from the year of assessment 2019.
- To assist companies that are affected by the COVID-19 pandemic and to reduce the companies’ operating costs, it is proposed that tax deduction for rental reduction for business premises is extended for 6 months.
- Micro, Small and Medium Enterprises (MSMEs) that carry out merger or acquisition scheme is given stamp duty exemption on instruments executed from 1 July 2020 to 31 December 2021, it is proposed the existing incentive be extended for 1 year.
- To attract oil and gas companies to invest and venture into LLA, it is proposed tax incentives be provided as follows: i. petroleum income tax rate at 25%; ii. Accelerated Capital Allowance within 2 years; iii. losses from decommissioning activities are allowed to be carried back and set-off against the income for 2 consecutive immediate preceding years of assessment. Any unabsorbed carry back losses will be disregarded; and iv. export duty exemption on petroleum products.
- To stimulate the business activities of Micro, Small and Medium Enterprises (MSMEs), newly established MSMEs are given income tax rebate of up to RM20,000 for each year of assessment, for the first 3 years of assessment subject to certain conditions.
- It is proposed the scope of excise duty be expanded to include liquid or gel containing nicotine used for electronic cigarettes and vape. Excise duty will be imposed at the rate of RM1.20 per millilitre. Excise duty for non-nicotine liquid or gel used for electronic cigarettes and vape will be increased from RM0.40 per millilitre to RM1.20 per millilitre similar to excise duty for liquid or gel containing nicotine.
